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114th Congress     }                                {    Rept. 114-393
                        HOUSE OF REPRESENTATIVES
 2d Session        }                                {           Part 1
======================================================================
 
                  IRAN TERROR FINANCE TRANSPARENCY ACT

                                _______
                                

January 11, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Royce, from the Committee on Foreign Affairs, submitted the 
                               following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 3662]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Foreign Affairs, to whom was referred the 
bill (H.R. 3662) to enhance congressional oversight over the 
administration of sanctions against certain Iranian terrorism 
financiers, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                           TABLE OF CONTENTS

                                                                   Page
Background and Purpose of Legislation............................     2
Hearings.........................................................     4
Performance Goals and Objectives.................................     7
Committee Consideration..........................................     7
Committee Oversight Findings.....................................     7
New Budget Authority, Tax Expenditures, and Federal Mandates.....     7
Congressional Budget Office Cost Estimate........................     8
Directed Rule Making.............................................    10
Non-Duplication of Federal Programs..............................    10
Congressional Accountability Act.................................    10
New Advisory Committees..........................................    10
Earmark Identification...........................................    10
Constitutional Authority Statement...............................    10
Section-by-Section Analysis......................................    11
Changes in Existing Law Made by the Bill, as Reported............    12
Additional and Dissenting Views..................................    19

                 Background and Purpose of Legislation

    On July 14, 2015, the United States, negotiating alongside 
the United Kingdom, France, Germany, Russia, and China as the 
``P5+1'' reached a ``Joint Comprehensive Plan of Action'' 
(JCPOA) with Iran. This final agreement asserts to limit Iran's 
nuclear program to peaceful purposes, in exchange for broad 
relief from U.S., European Union (EU), and United Nations 
sanctions. A resolution sponsored by the United States to 
approve the deal and allow for the removal of U.N. sanctions 
was passed by the Security Council on July 20, 2015. The 
agreement's ``Adoption Day'' was marked on October 18, 2015. 
The Obama administration asserted that the 90-day timeframe 
allowed for review of the JCPOA by Congress under the Iran 
Nuclear Agreement Review Act (P.L. 114-17) and for review by 
Iran and any other legislature of the other P5+1 states. On 
Adoption Day, the United States issued the provisional 
presidential waivers required to implement U.S. sanctions 
relief, with the waivers and associated sanctions relief to 
formally take effect on ``Implementation Day.''
    The Committee expects Implementation Day to take place 
within the next few weeks. Once it does, the United States, the 
U.N., and the EU will cease application of specific sanctions. 
The U.N. Security Council will terminate the provisions of its 
resolutions on Iran: 1696 (2006), 1737 (2006), 1747 (2007), 
1803 (2008), 1835 (2008), 1929 (2010), and 2224 (2015).
    Members of Congress have expressed concerns with the scale 
of the sanctions relief offered by the U.S. and its negotiating 
partners. The agreement lifts restrictions on arms sales to 
Iran after 5 years, and, after 8, removes restrictions on 
Iran's ballistic missiles. Experts have testified in front of 
the Committee that Iran will likely use the financial windfall 
gained from sanctions relief to reinforce its ``revolutionary'' 
regime at home while bankrolling terrorist activity in the 
region, including Hamas and Hezbollah.
    Iran's ballistic missile program, in particular, has 
concerned Congress. Ballistic missiles are a central component 
of any country's nuclear weapons program as they are the most 
effective way to deliver a nuclear warhead--no country that has 
not aspired to possess nuclear weapons has ever opted to 
sustain a lengthy and expensive missile program. Iran's long-
range ballistic missiles provide it the ability to target 
Israel as well as U.S. forces throughout the Middle East. Iran 
has been undertaking extensive efforts aimed at providing their 
long-range ballistic missile forces greater accuracy and range.
    The 2013 interim agreement called for Iran to abide by all 
U.N. Security Council resolutions--which state that ``Iran 
shall not undertake any activity related to ballistic missiles 
capable of delivering nuclear weapons.'' In February 2014, U.S. 
negotiator Wendy Sherman testified that Iran's ballistic 
missile program ``is, indeed, going to be part of something 
that has to be addressed as part of a comprehensive 
agreement.'' However, after the Supreme Leader called 
restrictions on Iran's ballistic missiles ``a stupid, idiotic 
expectation,'' Deputy Secretary of State Antony Blinken 
testified that ``The scope of this agreement, if there is one, 
is the nuclear program. That's what our partners have agreed 
to. That is what is being negotiated. It is not a missile 
agreement.''
    The final agreement provides Iran with substantial relief 
from sanctions on its ballistic missile program without 
requiring any limits on Iran's efforts to develop this 
dangerous technology. In what appears to be a last minute 
concession driven by Russia and China, after 8 years the 
agreement removes the ban on Iran developing ballistic missiles 
potentially capable of reaching the United States. Iran has 
conducted two ballistic missile tests in the wake of the deal, 
both in violation of a binding U.N. Security Council 
resolution. Iranian President Hassan Rouhani has recently 
ordered the defense ministry to accelerate Iran's missile 
program.
    Iran will receive up to $150 billion in funds and or assets 
held abroad. Such large-scale sanctions relief will allow the 
Iranian economy to recover and fund a new generation of 
terrorism and threats. The United States has designated Iran as 
a State Sponsor of Terrorism since 1984. The State Department 
report on international terrorism for 2013 stated that Iran 
``continued its terrorist-related activity'' and describes 
Iran's support for key proxies including Hezbollah, Hamas, and 
the Assad regime as well as opposition militants in Bahrain and 
separatists in northern Yemen who recently toppled the 
country's government. Experts warn that Iran's significant 
support for Shia militias fighting ISIS in Iraq risks fueling 
sectarian tension. Similarly, Iran has used the Houthi advances 
in Yemen as an opportunity to advance its regional objectives 
by leveraging a Zaidi Shiite armed group, similar to its 
relationship with Shiite Hezbollah leaders in Lebanon. It also 
sees Yemen as a battlefield in its proxy war with Saudi Arabia, 
a longtime competitor for regional hegemony.
    Within this context, the Obama administration made a 
political commitment to provide Iran relief from ``nuclear 
related'' sanctions using waivers and regulatory authority. Yet 
many sanctions related to Iran's nuclear program are also 
related to Iran's other destabilizing activities--including its 
support for international terrorism, its ballistic missile 
program, and its conventional weapons programs.
    U.S. sanctions are also aimed at preventing the Iranian 
banks that use money laundering and other illicit financial 
practices to support terrorism and Iran's other destabilizing 
activities from accessing the U.S. and global financial 
systems. These illicit financial practices are so pervasive in 
Iran that since November 2011 the entire country has been 
designated as a ``Jurisdiction of Primary Money Laundering 
Concern'' by the U.S. Treasury Department.
    In announcing the nuclear agreement, President Obama 
stated, ``American sanctions on Iran for its support of 
terrorism, its human rights abuses, its ballistic missile 
program, will continue to be fully enforced.'' However, there 
is nothing in U.S. law to prevent the administration from 
lifting sanctions on those involved in these destructive 
activities.
    In fact, under the deal, the Obama administration agreed to 
lift sanctions on a significant number of specific individuals, 
companies, and banks, some of which are engaged in Iran's 
support for terrorism and its ballistic missile program.
    In response, this legislation is designed to block the 
President from offering sanctions relief to an individual or 
bank until certifying that such entity has not conducted a 
significant transaction with a terrorist organization, the 
Islamic Revolutionary Guard Corps, or in support of either 
Iran's ballistic missile or its conventional weapons programs.
    It also prohibits the administration from lifting Iran's 
designation as a ``Jurisdiction of Primary Money Laundering 
Concern'' until it certifies that the Government of Iran is no 
longer supporting terrorism, pursuing weapons of mass 
destruction and their means of delivery, or engaging in illicit 
financial activities.
    The bill applies the Congressional Review Act to provide 
Congress the ability to disapprove of Iran-related changes to 
the Code of Federal Regulations. Finally, it clarifies that 
Iran's proxies--Hezbollah, Hamas, and the Palestinian Islamic 
Jihad--are included in the definition terrorist organizations 
for the purposes of financial sanctions against Iran.

                                Hearings

    During the 114th Congress, the Committee has continued its 
active oversight regarding Iran, including multiple hearings 
related to the content of 3662, such as:

January 27, 2015--Full Committee: ``Iran Nuclear Negotiations 
        After the Second Extension: Where Are They Going?'' The 
        Honorable Eric S. Edelman, Distinguished Fellow, Center 
        for Strategic and Budgetary Assessments; Mr. John 
        Hannah, Senior Fellow, Foundation for Defense of 
        Democracies; Mr. Ray Takeyh, Senior Fellow for Middle 
        Eastern Studies, Council on Foreign Relations; and The 
        Honorable Robert Einhorn, Senior Fellow, Foreign Policy 
        Program, The Brookings Institution.
February 11, 2015--Subcommittee on Terrorism, Nonproliferation, 
        and Trade: ``State Sponsor of Terror: The Global Threat 
        of Iran.'' Frederick W. Kagan, Ph.D., Christopher 
        DeMuth Chair and Director, Critical Threats Project, 
        American Enterprise Institute; Mr. Ilan I. Berman, Vice 
        President, American Foreign Policy Council; Mr. Tony 
        Badran, Research Fellow, Foundation for Defense of 
        Democracies; and Daniel L. Byman, Ph.D., Professor, 
        Security Studies Program, Edmund A. Walsh School of 
        Foreign Service, Georgetown University.
February 26, 2015--Joint Hearing: Subcommittee on the Middle 
        East and North Africa and Subcommittee on Africa, 
        Global Health, Global Human Rights, and International 
        Organizations: ``The Shame of Iranian Human Rights.'' 
        Mr. Shayan Arya, Central Committee Member, 
        Constitutionalist Party of Iran (Liberal Democrat); Mr. 
        Mohsen Sazegara, President, Research Institute on 
        Contemporary Iran; Mr. Anthony Vance, Director, U.S. 
        Baha'i Office of Public Affairs.
March 18, 2015--Joint Hearing: Subcommittee on the Middle East 
        and North Africa and Subcommittee on the Western 
        Hemisphere: ``Iran and Hezbollah in the Western 
        Hemisphere.'' Mr. Joseph Humire, Author; Mr. Dardo 
        Lopez-Dolz (former Vice Minister of Interior of Peru); 
        Mr. Scott Modell, Senior Advisor, The Rapidan Group; 
        and Mr. Michael Shifter, President, Inter-American 
        Dialogue.
March 19, 2015--Full Committee: ``Negotiations with Iran: 
        Blocking or Paving Tehran's Path to Nuclear Weapons?'' 
        The Honorable Antony J. Blinken, Deputy Secretary of 
        State, U.S. Department of State; Mr. Adam J. Szubin, 
        Acting Under Secretary, Office of Terrorism and 
        Financial Intelligence, U.S. Department of the 
        Treasury.
March 24, 2015--Subcommittee on the Middle East and North 
        Africa: ``Iran's Noncompliance with Its International 
        Atomic Energy Agency Obligations.'' Mr. William H. 
        Tobey, Senior Fellow, Belfer Center for Science and 
        International Affairs, John F. Kennedy School of 
        Government, Harvard University; Ms. Rebeccah L. 
        Heinrichs, Fellow, George C. Marshall Institute; Mr. 
        David Albright, Founder and President, Institute for 
        Science and International Security.
April 22, 2015--Full Committee: ``Nuclear Agreement with Iran: 
        Can't Trust, Can We Verify?'' Mr. Charles Duelfer, 
        Chairman, Omnis, Inc. (former Chairman, UN Special 
        Commission on Iraq [UNSCOM]); The Honorable Stephen G. 
        Rademaker, National Security Advisor, Bipartisan Policy 
        Center (former Assistant Secretary, Bureau of Arms 
        Control & Bureau of International Security and 
        Nonproliferation, U.S. Department of State.); Mr. David 
        Albright, Founder and President, Institute for Science 
        and International Security.
June 2, 2015--Full Committee: ``Americans Detained in Iran.'' 
        Mr. Ali Rezaian (brother of Jason Rezaian); Mrs. 
        Naghmeh Abedini (wife of Saeed Abedini); Ms. Sarah 
        Hekmati (sister of Amir Hekmati); Mr. Daniel Levinson 
        (son of Robert Levinson).
June 10, 2015--Joint Hearing: Committee on Foreign Affairs, 
        Subcommittee on the Middle East and North Africa and 
        Committee on Armed Services, Subcommittee on Strategic 
        Forces: ``Iran's Enduring Ballistic Missile Threat.'' 
        Lieutenant General Michael T. Flynn, USA, Retired 
        (former Director, Defense Intelligence Agency); The 
        Honorable Robert Joseph, Ph.D., Senior Scholar, 
        National Institute for Public Policy (former Under 
        Secretary of State for Arms Control and International 
        Security); David A. Cooper, Ph.D., James V. Forrestal 
        Professor and Chair of the Department of National 
        Security Affairs, U.S. Naval War College; Anthony H. 
        Cordesman, Ph.D., Arleigh A. Burke Chair in Strategy, 
        Center for Strategic and International Studies.
June 16, 2015--Full Committee: ``Advancing United States' 
        Interests at the United Nations.'' The Honorable 
        Samantha Power, U.S. Permanent Representative, United 
        States Mission to the United Nations, U.S. Department 
        of State.
June 17, 2015--Subcommittee on the Middle East and North 
        Africa: ``The Iran, North Korea, and Syria 
        Nonproliferation Act: State Department's Non-
        Compliance.'' Mr. Thomas Melito, Director, 
        International Affairs and Trade, Government 
        Accountability Office.
July 9, 2015--Full Committee: ``Implications of a Nuclear 
        Agreement with Iran (Part I).'' The Honorable Stephen 
        G. Rademaker, Foreign Policy Project Advisor, 
        Bipartisan Policy Center (former Assistant Secretary, 
        Bureau of Arms Control & Bureau of International 
        Security and Nonproliferation, U.S. Department of 
        State); Michael Doran, Ph.D., Senior Fellow, Hudson 
        Institute; Michael Makovsky, Ph.D., Chief Executive 
        Officer, JINSA Germunder Center Iran Task Force; 
        Kenneth M. Pollack, Ph.D., Senior Fellow, Center for 
        Middle East Policy, The Brookings Institution.
July 14, 2015--Full Committee: ``Implications of a Nuclear 
        Agreement with Iran (Part II).'' The Honorable Joseph 
        I. Lieberman, Co-Chair, Iran Task Force, Foundation for 
        the Defense of Democracies (former United States 
        Senator); General Michael V. Hayden, USAF, Retired, 
        Principal, Chertoff Group (former Director, Central 
        Intelligence Agency); The Honorable R. Nicholas Burns, 
        Roy and Barbara Goodman Family Professor of Diplomacy 
        and International Relations, Belfer Center for Science 
        and International Affairs, John F. Kennedy School of 
        Government, Harvard University (former Under Secretary 
        for Political Affairs, U.S. Department of State); Ray 
        Takeyh, Ph.D., Senior Fellow, Council on Foreign 
        Relations.
July 23, 2015--Full Committee: ``Implications of a Nuclear 
        Agreement with Iran (Part III).'' The Honorable Robert 
        Joseph, Ph.D., Senior Scholar, National Institute for 
        Public Policy (former Under Secretary of State for Arms 
        Control and International Security); Mr. Mark Dubowitz, 
        Executive Director, Foundation for the Defense of 
        Democracies; Mr. Ilan Goldenberg, Senior Fellow and 
        Director, Middle East Security Program, Center for a 
        New American Security.
July 28, 2015--Full Committee: ``Iran Nuclear Agreement: The 
        Administration's Case.'' The Honorable John F. Kerry, 
        Secretary of State, U.S. Department of State; The 
        Honorable Jacob Lew, Secretary of the Treasury, U.S. 
        Department of the Treasury; The Honorable Ernest Moniz, 
        Secretary of Energy, U.S. Department of Energy.
July 28, 2015--Joint Hearing: Subcommittee on Asia and the 
        Pacific, Subcommittee on Terrorism, Nonproliferation, 
        and Trade, and Subcommittee on the Middle East and 
        North Africa: ``The Iran-North Korea Strategic 
        Alliance.'' Mr. Ilan Berman, Vice President, American 
        Foreign Policy Council; Ms. Claudia Rosett, Journalist-
        in-Residence, Foundation for Defense of Democracies; 
        Larry Niksch, Ph.D., Senior Associate, Center for 
        Strategic and International Studies; Jim Walsh, Ph.D., 
        Research Associate, Security Studies Program, 
        Massachusetts Institute of Technology.
September 9, 2015--Full Committee: ``Implications of a Nuclear 
        Agreement with Iran (Part IV).'' General Chuck Wald, 
        USAF, Retired (former Deputy Commander, U.S. European 
        Command; Admiral William Fallon, USN, Retired (former 
        Commander, U.S. Central Command); Vice Admiral John 
        Bird, USN, Retired (former Commander, U.S. Seventh 
        Fleet); Mr. Leon Wieseltier, Isaiah Berlin Senior 
        Fellow in Culture and Policy, Foreign Policy and 
        Governance Studies, The Brookings Institution.
September 17, 2015--Subcommittee on the Middle East and North 
        Africa: ``Major Beneficiaries of the Iran Deal: IRGC 
        and Hezbollah.'' Emanuele Ottolenghi, Ph.D., Senior 
        Fellow, Foundation for Defense of Democracies; Matthew 
        Levitt, Ph.D., Fromer-Wexler Fellow, Director, Stein 
        Program on Counterterrorism and Intelligence, 
        Washington Institute for Near East Policy; Suzanne 
        Maloney, Ph.D., Interim Deputy Director, Center for 
        Middle East Policy, The Brookings Institution.
December 2, 2015--Full Committee: ``Iran's Islamic 
        Revolutionary Guard Corps: Fueling Middle East 
        Turmoil.'' Mr. Ali Alfoneh, Senior Fellow, Foundation 
        for Defense of Democracies; Mr. Scott Modell, Managing 
        Director, The Rapidan Group; Mr. Daniel Benjamin, 
        Norman E. McCulloch Jr. Director, The John Sloan Dickey 
        Center for International Understanding, Dartmouth 
        College (former Ambassador-at-Large and Coordinator for 
        Counterterrorism, U.S. Department of State).

                    Performance Goals and Objectives

    This bill blocks the administration from offering sanctions 
relief to any entity--a bank, business, or individual--included 
in the nuclear deal until the President certifies that they 
have not done business with a terrorist organization, Iran's 
Islamic Revolutionary Guard Corps, or in support of either 
Iran's ballistic missile or its conventional weapons programs. 
Performance goals associated with these objectives include, but 
are not limited to, the certification and delisting of persons 
or financial institutions includes no person or financial 
institution involved in Iran's support for terrorism or 
ballistic missile development.

                        Committee Consideration

    On January 7, 2015, the Foreign Affairs Committee marked up 
H.R. 3662 in open session, pursuant to notice. After debate, 
the bill was ordered reported favorably to the House by voice 
vote, a reporting quorum being present.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of rules of 
the House of Representatives, the Committee reports that 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of House Rule X, are 
incorporated in the descriptive portions of this report, 
particularly in the ``Background and Purpose of Legislation'' 
and ``Section-by-Section Analysis'' sections.

      New Budget Authority, Tax Expenditures, and Federal Mandates

    In compliance with clause 3(c)(2) of House Rule XIII and 
the Unfunded Mandates Reform Act (P.L. 104-4), the Committee 
adopts as its own the estimate of new budget authority, 
entitlement authority, tax expenditure or revenues, and Federal 
mandates contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, January 8, 2016.

Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3662, the Iran 
Terror Finance Transparency Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Pamela 
Greene, who can be reached at 226-2680.
            Sincerely,
                                                Keith Hall.
Enclosure

cc:
        Honorable Eliot L. Engel
        Ranking Member
H.R. 3662--Iran Terror Finance Transparency Act.
    As ordered reported by the House Committee on Foreign 
Affairs on January 7, 2016

                                SUMMARY

    H.R. 3662 would amend current law to provide more 
congressional oversight over U.S. economic and trade sanctions. 
The bill would prohibit the President from removing certain 
sanctions unless specific certifications are provided to the 
Congress. In addition, H.R. 3662 would subject any changes to 
Iranian sanctions to the Congressional Review Act, which allows 
the Congress to review and disapprove of new agency rules.
    Specifically, H.R. 3662 would require the administration to 
make certain certifications before it could remove sanctioned 
Iranian entities from U.S. lists of specially designated 
nationals and blocked persons and would expand the prohibited 
list of organizations under other sanctions. As a result of 
those requirements, CBO estimates that implementing H.R. 3662 
would increase administrative costs of the Treasury Department 
by less than $500,000 annually, subject to the availability of 
appropriations.
    In addition, because of its possible effect on the removal 
of sanctions on Iran, H.R. 3662 could increase both revenues 
and associated direct spending. If the bill's requirement of 
Presidential certification had no effect on sanctions, there 
would be no budgetary effect. If, on the other hand, enacting 
the bill effectively nullified the Joint Comprehensive Plan of 
Action (JCPOA) related to Iran's nuclear activities, certain 
sanctions would continue in effect, and additional revenues 
(relative to CBO's baseline) from penalties for violations of 
those sanctions would amount to about $220 million over the 
2016-2025 period, CBO estimates. Most of those receipts would 
be spent, so direct spending also would increase, but by less 
than the revenues. On net, deficits over the 2016-2025 period 
would be reduced. However, CBO has no basis for a specific 
estimate of those budgetary effects because it has no basis for 
projecting how the legislation might affect the timing of the 
possible waiver of sanctions under the JCPOA.
    Because enacting the legislation could affect direct 
spending and revenues, pay-as-you-go procedures apply. CBO 
estimates that enacting H.R. 3662 would not increase net direct 
spending by more than $5 billion and would not increase on-
budget deficits in any of the four consecutive 10-year periods 
beginning in 2026.

                           BASIS OF ESTIMATE

    On July 14, 2015, the JCPOA was agreed to by a number of 
parties, including negotiators from the United States and Iran. 
That agreement provides, in part, that under certain conditions 
Iran will receive relief from certain nuclear-related sanctions 
imposed by the United States. The United States currently 
imposes penalties for civil and criminal violations of some 
sanctions that would be waived under that agreement; 
collections of those amounts are recorded in the Federal budget 
as additional revenues. Some of the penalties from violating 
those sanctions are deposited into the United States Victims of 
State Sponsored Terrorism Fund and can be spent without further 
appropriation action.
    Before the JCPOA is implemented, a number of actions must 
be taken, including verification by the International Atomic 
Energy Agency that Iran has taken certain steps related to its 
nuclear activities. In order to account for uncertainty 
surrounding the full implementation of the JCPOA, CBO assumes 
for its baseline that there is a 50-percent chance that, under 
current law, the JCPOA will be implemented and the sanctions 
related to Iran's nuclear program will be waived, most likely 
starting in the first half of calendar year 2016. That 
assumption is consistent with how CBO would treat the 
possibility of an agency implementing a notice of proposed 
rulemaking.
    CBO has no basis for assessing whether and to what extent 
H.R. 3662 would slow the implementation of the JCPOA or whether 
the potential delay in the lifting of sanctions would entirely 
stop the implementation of the JCPOA. Hence, CBO has no basis 
for providing a specific estimate of the increases in revenues 
and direct spending that could occur under the legislation.
    If H.R. 3662 delayed or halted the waiver of sanctions 
under the JCPOA, CBO expects that the revenues from collections 
of civil and criminal penalties would increase relative to 
baseline revenues for existing sanctions because penalties 
related to those sanctions would continue to be assessed and 
collected during that time. Also, CBO expects that some 
additional revenues might be received from penalties for 
activities associated with the expanded list of organizations 
with which transactions are prohibited.
    In the event that the JCPOA was not implemented as a result 
of this legislation, CBO estimates that revenues from civil and 
criminal penalties would increase relative to the baseline, 
which incorporates a 50-percent chance that the related 
sanctions are waived, by roughly $220 million over the 2016-
2025 period. In that case, the associated direct spending would 
also increase by a smaller amount. In total, any net increase 
in revenues would exceed any direct spending effects over the 
2016-2025 period.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 3662 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.

                          ESTIMATE PREPARED BY

Federal Costs: Matthew Pickford
Federal Revenues: Pamela Greene
Impact on State, Local, and Tribal Governments: Jon Sperl
Impact on the Private Sector: Logan Smith

                         ESTIMATE APPROVED BY:

H. Samuel Papenfuss
Deputy Assistant Director for Budget Analysis

                          Directed Rule Making

    Pursuant to clause 3(c) of House Rule XIII, as modified by 
section 3(i) of H. Res. 5 during the 114th Congress, the 
Committee notes that H.R. 3662 contains no directed rule-making 
provisions.

                  Non-Duplication of Federal Programs

    Pursuant to clause 3(c) of House Rule XIII, as modified by 
section 3(g)(2) of H. Res. 5 during the 114th Congress, the 
Committee states that no provision of this bill establishes or 
reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                    Congressional Accountability Act

    H.R. 3662 does not apply to terms and conditions of 
employment or to access to public services or accommodations 
within the legislative branch.

                        New Advisory Committees

    H.R. 3662 does not establish or authorize any new advisory 
committees.

                         Earmark Identification

    H.R. 3662 contains no congressional earmarks, limited tax 
benefits, or limited tariff benefits as described in clauses 
9(e), 9(f), and 9(g) of House Rule XXI.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

                      Section-by-Section Analysis

Section 1. Short Title.
    This section provides that the short title of this Act is 
the ``Iran Terror Finance Transparency Act.''
Section 2. Certification Requirement for Removal of Foreign Financial 
        Institutions, Including Iranian Financial Institutions, from 
        the List of Specially Designated Nationals and Blocked Persons.
    As part of the Iran nuclear agreement's ``Joint 
Comprehensive Plan of Action,'' the administration has 
committed to lifting sanctions against a number of foreign 
financial institutions. This section prohibits the President 
from lifting sanctions against these financial institutions 
until the President certifies to the appropriate congressional 
committees that the bank or financial institution has not 
conducted a significant transaction for, or on behalf of, 
Iran's Revolutionary Guard Corps, a foreign terrorist 
organization, or anyone sanctioned in connection with Iran's 
weapons of mass destruction and ballistic missile programs.
Section 3. Certification Requirement for Removal of Certain Foreign 
        Persons from the List of Specially Designated Nationals and 
        Blocked Persons.
    As part of the Joint Comprehensive Plan of Action, the 
administration has committed to lifting sanctions against a 
number of persons and entities. This section prohibits the 
President from lifting sanctions against these persons or 
entities until the President certifies to the appropriate 
congressional committees that they have not conducted a 
significant transaction for, or provided material support to, a 
foreign terrorist organization, or anyone sanctioned in 
connection with Iran's weapons of mass destruction and 
ballistic missile programs.
Section 4. Certification Requirement for Removal of Designation of Iran 
        as a Jurisdiction of Primary Money Laundering Concern.
    In November 2011, the United States designated the entire 
Iranian banking sector, including the country's central bank, 
as a ``primary money laundering concern.'' This provision 
prohibits the President from removing the designation of Iran 
as a primary money laundering concern until the President 
certifies that Iran is no longer supporting terrorism, or 
pursuing weapons of mass destruction or illicit financial 
activities.
Section 5. Applicability of Congressional Review of Certain Agency 
        Rulemaking related to Iran.
    This provision allows the Congress to disapprove of any 
alterations to regulations governing Iran sanctions, and 
requires comprehensive reporting on licenses issued by the U.S. 
for activities in Iran.
Section 6. Prohibitions and Conditions with Respect to Certain Accounts 
        Held by Foreign Financial Institutions.
    This provision adds Hezbollah, Hamas, and Palestinian 
Islamic Jihad to the third-party financial sanctions contained 
in the Comprehensive Iran Sanctions, Accountability, and 
Divestment Act of 2010, explicitly sanctioning anyone doing 
business with these organizations.
Section 7. Definitions.
    This section provides definitions of several key terms used 
throughout.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

  COMPREHENSIVE IRAN SANCTIONS, ACCOUNTABILITY, AND DIVESTMENT ACT OF 
                                  2010



           *       *       *       *       *       *       *
TITLE I--SANCTIONS

           *       *       *       *       *       *       *


SEC. 104. MANDATORY SANCTIONS WITH RESPECT TO FINANCIAL INSTITUTIONS 
                    THAT ENGAGE IN CERTAIN TRANSACTIONS.

    (a) Findings.--Congress makes the following findings:
            (1) The Financial Action Task Force is an 
        intergovernmental body whose purpose is to develop and 
        promote national and international policies to combat 
        money laundering and terrorist financing.
            (2) Thirty-three countries, plus the European 
        Commission and the Cooperation Council for the Arab 
        States of the Gulf, belong to the Financial Action Task 
        Force. The member countries of the Financial Action 
        Task Force include the United States, Canada, most 
        countries in western Europe, Russia, the People's 
        Republic of China, Japan, South Korea, Argentina, and 
        Brazil.
            (3) In 2008 the Financial Action Task Force 
        extended its mandate to include addressing ``new and 
        emerging threats such as proliferation financing'', 
        meaning the financing of the proliferation of weapons 
        of mass destruction, and published ``guidance papers'' 
        for members to assist them in implementing various 
        United Nations Security Council resolutions dealing 
        with weapons of mass destruction, including United 
        Nations Security Council Resolutions 1737 (2006) and 
        1803 (2008), which deal specifically with proliferation 
        by Iran.
            (4) The Financial Action Task Force has repeatedly 
        called on members--
                    (A) to advise financial institutions in 
                their jurisdictions to give special attention 
                to business relationships and transactions with 
                Iran, including Iranian companies and financial 
                institutions;
                    (B) to apply effective countermeasures to 
                protect their financial sectors from risks 
                relating to money laundering and financing of 
                terrorism that emanate from Iran;
                    (C) to protect against correspondent 
                relationships being used by Iran and Iranian 
                companies and financial institutions to bypass 
                or evade countermeasures and risk-mitigation 
                practices; and
                    (D) to take into account risks relating to 
                money laundering and financing of terrorism 
                when considering requests by Iranian financial 
                institutions to open branches and subsidiaries 
                in their jurisdictions.
            (5) At a February 2010 meeting of the Financial 
        Action Task Force, the Task Force called on members to 
        apply countermeasures ``to protect the international 
        financial system from the ongoing and substantial money 
        laundering and terrorist financing (ML/TF) risks'' 
        emanating from Iran.
    (b) Sense of Congress Regarding the Imposition of Sanctions 
on the Central Bank of Iran.--Congress--
            (1) acknowledges the efforts of the United Nations 
        Security Council to impose limitations on transactions 
        involving Iranian financial institutions, including the 
        Central Bank of Iran; and
            (2) urges the President, in the strongest terms, to 
        consider immediately using the authority of the 
        President to impose sanctions on the Central Bank of 
        Iran and any other Iranian financial institution 
        engaged in proliferation activities or support of 
        terrorist groups.
    (c) Prohibitions and Conditions With Respect to Certain 
Accounts Held by Foreign Financial Institutions.--
            (1) In general.--Not later than 90 days after the 
        date of the enactment of this Act, the Secretary of the 
        Treasury shall prescribe regulations to prohibit, or 
        impose strict conditions on, the opening or maintaining 
        in the United States of a correspondent account or a 
        payable-through account by a foreign financial 
        institution that the Secretary finds knowingly engages 
        in an activity described in paragraph (2).
            (2) Activities described.--A foreign financial 
        institution engages in an activity described in this 
        paragraph if the foreign financial institution--
                    (A) facilitates the efforts of the 
                Government of Iran (including efforts of Iran's 
                Revolutionary Guard Corps or any of its agents 
                or affiliates)--
                            (i) to acquire or develop weapons 
                        of mass destruction or delivery systems 
                        for weapons of mass destruction; or
                            (ii) to provide support for 
                        organizations designated as foreign 
                        terrorist organizations under section 
                        219(a) of the Immigration and 
                        Nationality Act (8 U.S.C. 1189(a)) or 
                        support for acts of international 
                        terrorism (as defined in section 14 of 
                        the Iran Sanctions Act of 1996 (Public 
                        Law 104-172; 50 U.S.C. 1701 note)), 
                        including Hezbollah, Hamas, the 
                        Palestinian Islamic Jihad, and any 
                        affiliates or successors thereof;
                    (B) facilitates the activities of--
                            (i) a person subject to financial 
                        sanctions pursuant to United Nations 
                        Security Council Resolution 1737 
                        (2006), 1747 (2007), 1803 (2008), or 
                        1929 (2010), or any other resolution 
                        that is agreed to by the Security 
                        Council and imposes sanctions with 
                        respect to Iran; or
                            (ii) a person acting on behalf of 
                        or at the direction of, or owned or 
                        controlled by, a person described in 
                        clause (i);
                    (C) engages in money laundering to carry 
                out an activity described in subparagraph (A) 
                or (B);
                    (D) facilitates efforts by the Central Bank 
                of Iran or any other Iranian financial 
                institution to carry out an activity described 
                in subparagraph (A) or (B); or
                    (E) facilitates a significant transaction 
                or transactions or provides significant 
                financial services for--
                            (i) Iran's Revolutionary Guard 
                        Corps or any of its agents or 
                        affiliates whose property or interests 
                        in property are blocked pursuant to the 
                        International Emergency Economic Powers 
                        Act (50 U.S.C. 1701 et seq.); or
                            (ii) a person whose property or 
                        interests in property are blocked 
                        pursuant to that Act in connection 
                        with--
                                    (I) Iran's proliferation of 
                                weapons of mass destruction or 
                                delivery systems for weapons of 
                                mass destruction; or
                                    (II) Iran's support for 
                                international terrorism.
            (3) Penalties.--The penalties provided for in 
        subsections (b) and (c) of section 206 of the 
        International Emergency Economic Powers Act (50 U.S.C. 
        1705) shall apply to a person that violates, attempts 
        to violate, conspires to violate, or causes a violation 
        of regulations prescribed under paragraph (1) of this 
        subsection to the same extent that such penalties apply 
        to a person that commits an unlawful act described in 
        section 206(a) of that Act.
            (4) Determinations regarding nioc and nitc.--
                    (A) Determinations.--For purposes of 
                paragraph (2)(E), the Secretary of the Treasury 
                shall, not later than 45 days after the date of 
                the enactment of the Iran Threat Reduction and 
                Syria Human Rights Act of 2012--
                            (i) determine whether the NIOC or 
                        the NITC is an agent or affiliate of 
                        Iran's Revolutionary Guard Corps; and
                            (ii) submit to the appropriate 
                        congressional committees a report on 
                        the determinations made under clause 
                        (i), together with the reasons for 
                        those determinations.
                    (B) Form of report.--A report submitted 
                under subparagraph (A)(ii) shall be submitted 
                in unclassified form but may contain a 
                classified annex.
                    (C) Applicability with respect to petroleum 
                transactions.--
                            (i) Application of sanctions.--
                        Except as provided in clause (ii), if 
                        the Secretary of the Treasury 
                        determines that the NIOC or the NITC is 
                        a person described in clause (i) or 
                        (ii) of paragraph (2)(E), the 
                        regulations prescribed under paragraph 
                        (1) shall apply with respect to a 
                        significant transaction or transactions 
                        or significant financial services 
                        knowingly facilitated or provided by a 
                        foreign financial institution for the 
                        NIOC or the NITC, as applicable, for 
                        the purchase of petroleum or petroleum 
                        products from Iran, only if a 
                        determination of the President under 
                        section 1245(d)(4)(B) of the National 
                        Defense Authorization Act for Fiscal 
                        Year 2012 (22 U.S.C. 8513a(d)(4)(B)) 
                        that there is a sufficient supply of 
                        petroleum and petroleum products 
                        produced in countries other than Iran 
                        to permit purchasers of petroleum and 
                        petroleum products from Iran to reduce 
                        significantly their purchases from Iran 
                        is in effect at the time of the 
                        transaction or the provision of the 
                        service.
                            (ii) Exception for certain 
                        countries.--If the Secretary of the 
                        Treasury determines that the NIOC or 
                        the NITC is a person described in 
                        clause (i) or (ii) of paragraph (2)(E), 
                        the regulations prescribed under 
                        paragraph (1) shall not apply to a 
                        significant transaction or transactions 
                        or significant financial services 
                        knowingly facilitated or provided by a 
                        foreign financial institution for the 
                        NIOC or the NITC, as applicable, for 
                        the purchase of petroleum or petroleum 
                        products from Iran if an exception 
                        under paragraph (4)(D) of section 
                        1245(d) of the National Defense 
                        Authorization Act for Fiscal Year 2012 
                        (22 U.S.C. 8513a(d)) applies to the 
                        country with primary jurisdiction over 
                        the foreign financial institution at 
                        the time of the transaction or the 
                        provision of the service.
                            (iii) Rule of construction.--The 
                        exceptions in clauses (i) and (ii) 
                        shall not be construed to limit the 
                        authority of the Secretary of the 
                        Treasury to impose sanctions pursuant 
                        to the regulations prescribed under 
                        paragraph (1) for an activity described 
                        in paragraph (2) to the extent the 
                        activity would meet the criteria 
                        described in that paragraph in the 
                        absence of the involvement of the NIOC 
                        or the NITC.
                    (D) Definitions.--In this paragraph:
                            (i) Nioc.--The term ``NIOC'' means 
                        the National Iranian Oil Company.
                            (ii) Nitc.--The term ``NITC'' means 
                        the National Iranian Tanker Company.
    (d) Penalties for Domestic Financial Institutions for 
Actions of Persons Owned or Controlled by Such Financial 
Institutions.--
            (1) In general.--Not later than 90 days after the 
        date of the enactment of this Act, the Secretary of the 
        Treasury shall prescribe regulations to prohibit any 
        person owned or controlled by a domestic financial 
        institution from knowingly engaging in a transaction or 
        transactions with or benefitting Iran's Revolutionary 
        Guard Corps or any of its agents or affiliates whose 
        property or interests in property are blocked pursuant 
        to the International Emergency Economic Powers Act (50 
        U.S.C. 1701 et seq.).
            (2) Penalties.--The penalties provided for in 
        section 206(b) of the International Emergency Economic 
        Powers Act (50 U.S.C. 1705(b)) shall apply to a 
        domestic financial institution to the same extent that 
        such penalties apply to a person that commits an 
        unlawful act described in section 206(a) of that Act 
        if--
                    (A) a person owned or controlled by the 
                domestic financial institution violates, 
                attempts to violate, conspires to violate, or 
                causes a violation of regulations prescribed 
                under paragraph (1) of this subsection; and
                    (B) the domestic financial institution knew 
                or should have known that the person violated, 
                attempted to violate, conspired to violate, or 
                caused a violation of such regulations.
    (e) Requirements for Financial Institutions Maintaining 
Accounts for Foreign Financial Institutions.--
            (1) In general.--The Secretary of the Treasury 
        shall prescribe regulations to require a domestic 
        financial institution maintaining a correspondent 
        account or payable-through account in the United States 
        for a foreign financial institution to do one or more 
        of the following:
                    (A) Perform an audit of activities 
                described in subsection (c)(2) that may be 
                carried out by the foreign financial 
                institution.
                    (B) Report to the Department of the 
                Treasury with respect to transactions or other 
                financial services provided with respect to any 
                such activity.
                    (C) Certify, to the best of the knowledge 
                of the domestic financial institution, that the 
                foreign financial institution is not knowingly 
                engaging in any such activity.
                    (D) Establish due diligence policies, 
                procedures, and controls, such as the due 
                diligence policies, procedures, and controls 
                described in section 5318(i) of title 31, 
                United States Code, reasonably designed to 
                detect whether the Secretary of the Treasury 
                has found the foreign financial institution to 
                knowingly engage in any such activity.
            (2) Penalties.--The penalties provided for in 
        sections 5321(a) and 5322 of title 31, United States 
        Code, shall apply to a person that violates a 
        regulation prescribed under paragraph (1) of this 
        subsection, in the same manner and to the same extent 
        as such penalties would apply to any person that is 
        otherwise subject to such section 5321(a) or 5322.
    (f) Waiver.--The Secretary of the Treasury may waive the 
application of a prohibition or condition imposed with respect 
to a foreign financial institution pursuant to subsection (c) 
or section 104A or the imposition of a penalty under subsection 
(d) with respect to a domestic financial institution on and 
after the date that is 30 days after the Secretary--
            (1) determines that such a waiver is necessary to 
        the national interest of the United States; and
            (2) submits to the appropriate congressional 
        committees a report describing the reasons for the 
        determination.
    (g) Procedures for Judicial Review of Classified 
Information.--
            (1) In general.--If a finding under paragraph (1) 
        or (4) of subsection (c) or section 104A, a 
        prohibition, condition, or penalty imposed as a result 
        of any such finding, or a penalty imposed under 
        subsection (d), is based on classified information (as 
        defined in section 1(a) of the Classified Information 
        Procedures Act (18 U.S.C. App.)) and a court reviews 
        the finding or the imposition of the prohibition, 
        condition, or penalty, the Secretary of the Treasury 
        may submit such information to the court ex parte and 
        in camera.
            (2) Rule of construction.--Nothing in this 
        subsection shall be construed to confer or imply any 
        right to judicial review of any finding under paragraph 
        (1) or (4) of subsection (c) or section 104A, any 
        prohibition, condition, or penalty imposed as a result 
        of any such finding, or any penalty imposed under 
        subsection (d).
    (h) Consultations in Implementation of Regulations.--In 
implementing this section and the regulations prescribed under 
this section, the Secretary of the Treasury--
            (1) shall consult with the Secretary of State; and
            (2) may, in the sole discretion of the Secretary of 
        the Treasury, consult with such other agencies and 
        departments and such other interested parties as the 
        Secretary considers appropriate.
    (i) Definitions.--
            (1) In general.--In this section:
                    (A) Account; correspondent account; 
                payable-through account.--The terms 
                ``account'', ``correspondent account'', and 
                ``payable-through account'' have the meanings 
                given those terms in section 5318A of title 31, 
                United States Code.
                    (B) Agent.--The term ``agent'' includes an 
                entity established by a person for purposes of 
                conducting transactions on behalf of the person 
                in order to conceal the identity of the person.
                    (C) Financial institution.--The term 
                ``financial institution'' means a financial 
                institution specified in subparagraph (A), (B), 
                (C), (D), (E), (F), (G), (H), (I), (J), (M), or 
                (Y) of section 5312(a)(2) of title 31, United 
                States Code.
                    (D) Foreign financial institution; domestic 
                financial institution.--The terms ``foreign 
                financial institution'' and ``domestic 
                financial institution'' shall have the meanings 
                of those terms as determined by the Secretary 
                of the Treasury.
                    (E) Money laundering.--The term ``money 
                laundering'' means the movement of illicit cash 
                or cash equivalent proceeds into, out of, or 
                through a country, or into, out of, or through 
                a financial institution.
            (2) Other definitions.--The Secretary of the 
        Treasury may further define the terms used in this 
        section in the regulations prescribed under this 
        section.

           *       *       *       *       *       *       *


                            Additional Views

    The House Committee on Foreign Affairs has compiled an 
enviable record of bipartisan legislation and oversight, 
especially with regard to security matters. The Committee 
embodies the spirit that ``politics should end at the water's 
edge.''
    So I am disappointed that the Committee has approved H.R. 
3662 on a purely partisan vote. The bill was drafted and 
introduced without consultation with or input from Democrats on 
the Committee or in the House.
    In crafting legislation and conducting oversight in this 
Committee, I have made clear my views on the rogue regime in 
Iran. We were wrong to allow Iran to continue enriching during 
the talks that resulted in the JCPOA. This past September, I 
voted against the nuclear deal and I continue to believe the 
agreement is deeply flawed. I view the Iranian regime for what 
it is--the world's leading state sponsor of terrorism and a 
destabilizing force across the Middle East.
    But Congress had an opportunity to vote on the deal, and we 
lost. There weren't enough votes to override a veto or even 
send a resolution of disapproval to the President. And the 
agreement now has gone into effect.
    Now, I think that we have to work together on bipartisan 
legislation that will hold Iran's feet to the fire on its 
nuclear program, and hold the regime accountable for its 
support of terrorism and other nefarious activities. And also 
to help our ally Israel with her legitimate security needs.
    Unfortunately, the provisions of the bill would not 
accomplish its stated purpose of strengthening oversight of the 
Joint Comprehensive Plan of Action for Iran's nuclear program. 
Instead, this is yet another attempt to undermine the deal, 
rather than to ensure Iran lives up to its word. So I don't 
think it serves any purpose to take up a partisan bill like 
this that has the effect of killing the deal and leaving us 
with no clear path forward.
    Fundamentally, the bill would impose conditions on carrying 
out the U.S. commitment under the JCPOA that could never be 
met. No President could ever certify that a person has never 
engaged in sanctionable activity, particularly the activity for 
which the person was sanctioned in the first place. But without 
such a certification, none of the persons specified in the 
JCPOA could be removed from our sanctions list.
    Therefore, I oppose the bill. There is no shortage of good 
ideas of how to achieve our goals, and I am confident we can 
craft an effective bill and enact it with bipartisan support.

                                   Eliot L. Engel.

                            Dissenting Views

    H.R. 3662 is unfortunately yet another example of 
unproductive partisan politics to undermine what is now 
established U.S. policy. This bill does not offer measures to 
strengthen our foreign policy towards Iran. Instead of 
approaching this issue in a bipartisan manner to propose 
effective sanctions that communicate U.S. security policy, H.R. 
3662 is a political move that threatens to overturn an 
agreement that has already gone into effect. Instead, we should 
be working together across the aisle to develop measures that 
will improve our national security and strengthen our leverage 
with Iran and other countries trying to build up their nuclear 
arsenals. H.R. 3662 is a political gesture, not a bill designed 
to make us any safer.

                                   William Keating.

                              ----------                              


    I want to thank Chairman Royce, Ranking Member Engel, and 
my distinguished colleagues on the House Foreign Affairs 
Committee for all of the good work that we have done over the 
last year, which was typically done in a bipartisan fashion, 
respecting the order and process of our committee system. I 
share the feelings of many of my colleagues, including Ranking 
Member Engel, that H.R. 3662 stands out as an exception to our 
bipartisan efforts. Unfortunately, the bill was not drafted in 
the Foreign Affairs Committee, and no Democrats were consulted 
during the drafting of the bill. It faces a certain veto by the 
President. I had hoped that we could start 2016 by building on 
the bipartisanship that we achieved in passing the omnibus bill 
that will fund the needs of the American people. However, the 
lack of bipartisanship on H.R. 3662 has resulted in a bill that 
I and many of my Member colleagues are unable to support.
    While I supported the Joint Comprehensive Plan of Action 
(JCPOA), I appreciate that many Members have reservations about 
the United States signing the JCPOA with Iran. I think we all 
agree Iran is the world's leading state sponsor of terrorism 
and a destabilizing force across the Middle East. As Ranking 
Member Engel noted, Congress had an opportunity to vote on the 
plan, and there weren't enough votes to override a veto or even 
send a resolution of disapproval to the President. The JCPOA is 
now being implemented and represents the best chance for a 
long-term resolution that effectively addresses our nuclear 
proliferation concerns. I stand ready to work with my 
colleagues on bipartisan legislation that will hold the Iranian 
regime accountable for its nuclear program, its support of 
terrorism, and other nefarious activities. As this process 
moves forward, it is important to reaffirm strong support for 
our ally, Israel, and its legitimate security needs.

                                   Alan S. Lowenthal.


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